Judge: Strong case ‘hot goods’ settlements made under duress

A federal judge appears sympathetic to arguments that the U.S. Labor Department coerced farmers into signing financial settlements to prevent their crops from spoiling.

U.S. Magistrate Judge Thomas Coffin stated several times during a Dec. 3 court hearing that two Oregon farms had a strong case that the payment deals were made under duress.

“I’m telling you candidly the growers had very good grounds for injunctive relief,” Coffin said during recent oral arguments in Eugene, Ore.

He is now considering whether the settlements will be vacated.

Last year, the two farms — Pan-American Berry Growers and B&G Ditchen — paid the Labor Department $210,000 to settle allegations they had harvested blueberries in violation of federal minimum wage law.

The agency had threatened to invoke the “hot goods” provision of labor law, under which the government can block the shipment of products that are made unlawfully.

The Labor Department also told the farms’ customers that the crops were subject to the hot goods provision, after which the buyers refused to accept delivery.

In August, the farmers claimed in federal court that they had signed the consent decrees under duress because the fruit was perishable and asked for the deals to be overturned.

During the oral argument, Coffin said he was troubled the farmers had to waive their rights to appeal and couldn’t simply place the funds in escrow until they had a chance to defend themselves.

“I would have found that to be very disturbing,” said Coffin.

When asked about this hard-line this approach, a lawyer for the Labor Department said the agency was charged with preventing “hot goods” from entering commerce.

“Our view is this is driving a hard bargain in a settlement negotiation,” said Jeremiah Miller, the Labor Department attorney.

Coffin replied, “There is a difference in driving a hard bargain and an unfair bargain.”

Even so, the judge said the farms face a major hurdle to their motion to vacate the consent decrees — they could have immediately filed for a temporary restraining order seeking to block the agency’s actions.

Coffin questioned the farms’ attorney, Tim Bernasek, about why they waited nearly a year before trying to overturn the settlement deals in federal court.

“I just don’t understand the reason for waiting that long or the justification for it,” Coffin said. “DOL was holding the sword over your clients’ head.”

Bernasek explained that the farmers were under pressure to sell the crop and avoid hurting their professional reputation with buyers.

The farms were also reluctant to bring expensive litigation against the federal government when they weren’t clear about the agency’s authority, he said.

“There are economic realities to bringing an action like this,” Bernasek said.

Instead of litigating, the farms sought to resolve questions about the Labor Department’s hot goods policy through the political route, he said.

Several members of Oregon’s congressional delegation, as well a state labor and agriculture officials, protested the Labor Department’s policy but didn’t receive any meaningful answers, Bernasek said.

The Oregon Farm Bureau also filed a Freedom of Information Act request to learn more about the agency’s investigation but the agency failed to timely respond, he said.

“It’s due to an unwillingness on their part to provide the defendants with the information,” Bernasek said.

Documents since released by the Labor Department indicate that the agency did not follow its own guidelines for using the hot goods provision, he said.

The agency has provided some more information after the Oregon Farm Bureau filed a lawsuit alleging FOIA violations, Bernasek said.

However, those documents are heavily redacted and the farms still don’t have a full understanding of the Labor Department’s policies and procedures in the case, he said.

Bernasek said it’s disturbing that the agency is trying to keep such information secret, which suggests its conclusion that the farms violated labor law wasn’t based on firm evidence.

Jeremiah Miller of the Labor Department said it would be unfair to overturn the consent decrees now, because the farmworkers in the case have long dispersed and the agency would be prejudiced in trying to prove its case.

He said the farms made a rational decision to settle at the time and shouldn’t be able to renege on the deals.

“They were always free to disagree with (the agency’s) Wage and Hour (division) and try to ship their goods,” Miller said.

The farms could have explained to their clients that they didn’t believe the crops were harvested unlawfully, he said. “The berry growers could have convinced them they did not violate the (Fair Labor Standards) Act.”